Commentary on Political Economy

Wednesday, 22 July 2020

Senior US senator pushes for new tools to rein in China

Idaho Senator Jim Risch’s proposal addresses structural issues that were not fully resolved in the ‘phase one’ trade deal struck between China and the US this year © Financial Times
The leading senator overseeing US foreign policy is pushing to give Washington new tools to curb controversial Chinese trade practices, including sanctions for intellectual property violations.
In an interview with the Financial Times, Jim Risch of Idaho, the Republican chairman of the Senate foreign relations committee, said the US lacked a “comprehensive long-term strategy” to prod China to abide by international economic norms.
He also said the US needed to tackle an “increasingly unfavourable” military balance in the Pacific region by strengthening alliances with key countries including Japan, South Korea and Australia.
Under legislation expected to be announced on Wednesday, Mr Risch was to float a number of measures to rein in China at a time when relations between Washington and Beijing have deteriorated due to the coronavirus pandemic and tensions over Hong Kong.
If you want to do business with us, we’d love to do business with you, but we’ve got to be fair
Senator Jim Risch of Idaho
Passage this year is unlikely as attention in Washington turns to the national election in November. But the proposals could serve as a template for congressional action in the aftermath of the presidential polls.
Mr Risch said the proposed legislation — crafted with what he described as “input” from Democrats — would go “beyond [the Trump] administration” in hopes of focusing the attention of Chinese officials.
“This is not intended to worry them; the intent is to educate them,” he said. “The message is the same message we’ve been underscoring for a long time. That is: ‘Look, if you want to do business with us, we’d love to do business with you, but we’ve got to be fair.’” 
On the economic front, the bill targets structural issues in the US-China relationship — including the theft of intellectual property, the forced transfer of technology and the power of state-owned enterprises — that were not fully resolved in the “phase one” trade deal struck by Washington and Beijing in January, before coronavirus soured relations.
US officials had initially said they would enter a second stage of talks with China to discuss those matters. But President Donald Trump has ruled that out as he has criticised Beijing for not doing more to prevent the spread of what he calls the “China virus”. Mr Risch did not fault the president for being unsuccessful so far in extracting big concessions from China on structural economic reforms, despite levying billions of dollars of tariffs on imports to pressure Beijing.
“This is not a reflection on or criticism of anyone who has attempted this in the past. This is not easy stuff, this is a heavy lift.”
The Chinese embassy in Washington did not immediately respond to a request for comment.
One novel element of Mr Risch’s bill would make an addition to antitrust law to make it easier for US companies to challenge anti-competitive behaviour by Chinese state-owned enterprises. The legislation also requires US companies to report their compliance with China’s controversial “corporate social credit system” or face a fine, and allows US embassies to hire consultants to help companies shift supply chains out of China.
In addition, the US government would be required to submit a report to Congress identifying Chinese companies listed on US exchanges that pose a national security or economic risk to the US, or undermine human rights. 
Mr Risch’s legislation addresses the military balance in the Indo-Pacific region, calling it “increasingly unfavourable” to the US. The legislation claims China wanted to “use its growing military might in concert with other instruments of its national power to displace the United States in the Indo-Pacific and establish hegemony over the region”.
The bill would seek to boost the sometimes uneven US commitment to Pacific allies and partners such as Taiwan, Japan, South Korea, Australia, New Zealand, the Philippines and Thailand, as well as enhancing security ties with India.
Noting Mr Trump’s efforts to extract more money from South Korea in exchange for basing US troops in the country, Mr Risch said such problems could be transcended. “We’ve always had disagreements with allies, but we are allies in the large overarching manner,” he said.
The bill also calls for the Pentagon to report on the effect of Beijing’s military base in Djibouti, which it established in 2017 near a US military base in the country of fewer than 1m people. It calls for the secretary of state to report on whether the Chinese coast guard should be categorised as a military force or a civilian law enforcement entity.
Mr Risch’s office said three other Republican senators had co-sponsored the bill, including Mitt Romney of Utah, Cory Gardner of Colorado and Todd Young of Indiana. 

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